A market situation in which some market participants perceive they have the ability to influence the equilibrium price of its own product. Monopoly is a market with a single seller, monopsony a market with a single buyer. Oligopoly arises when there is more than one seller. Monopolistic competition describes a market where firms produce differentiated products but free entry drives equilibrium profit to zero. Imperfect competition is an example of market failure: the equilibrium of an economy with imperfect competition is generally not Pareto efficient. See also Bertrand competition; Cournot competition.